Question

1.) A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

				Budgeted Activity
Activity Cost Pool	Budgeted Cost			Product A1			Product B2
Activity 1	$	57,000			2,100			5,700
Activity 2	$	72,000			3,140			5,660
Activity 3	$	98,000			8,100			1,700

Annual production and sales level of Product A1 is 9,380 units, and the annual production and sales level of Product B2 is 23,210 units. What is the approximate overhead cost per unit of Product B2 under activity-based costing?

a.) $4.52 b.) $8.18 c.) $13.01 d.) $7.31 e.)$10.00

Answer 1

Calculate overhead cost per unit product B2

	Product B2
Activity 1 (57000/7800*5700)	41654
Activity 2 (72000/8800*5660)	46309
Activity 3 (98000/98000*1700)	17000
Total overhead	104963
Unit	23210
Overhead cost per unit	4.52

So answer is a) $4.52